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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                  FORM 10-K/A
 
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
 
                     FOR FISCAL YEAR ENDED JANUARY 3, 1999
 
                        COMMISSION FILE NUMBER: 0-25629
 
                            ------------------------
 
                              CARROLS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                DELAWARE                               16-0958146
    -------------------------------               -------------------
    (STATE OR OTHER JURISDICTION OF                 (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)
 
            968 JAMES STREET
           SYRACUSE, NEW YORK                            13203
---------------------------------------                ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)                (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (315) 424-0513
 
        Securities registered pursuant to Section 12(b) of the Act: None
 
        Securities registered pursuant to Section 12(g) of the Act:

                  9 1/2% Senior Subordinated Notes Due 2008
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes X  No__
 
     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
 
     The aggregate market value of the voting stock held by non-affiliates of
the Registrant: No voting stock is held by non-affiliates.
 
     The number of shares outstanding of each of the Registrant's classes of
common stock, as of April 16, 1999: 10.
 
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     This 10-K/A is being filed due to the Liquidity and Capital Resources
section of Item 7 being inadvertently omitted in our original 10-K filing for
the year ended December 31, 1998.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATION
 
OVERVIEW
 
     We are the largest Burger King franchisee in the world, and we have
operated Burger King restaurants since 1976. As of December 31, 1998, we
operated 343 Burger King restaurants located in 13 Northeastern, Midwestern and
Southeastern states. Over the last five years, we expanded our operations
through the acquisition and construction of additional Burger King restaurants
while also enhancing the quality of operations, the competitive position and
financial performance of our existing restaurants. As a result of our growth
strategy, we increased the total number of restaurants we operate by over 55%
from 1994 to 1998. In July 1998, we completed our acquisition of Pollo Tropical
for a cash purchase price of approximately $95 million. As a result, the
operations of Pollo Tropical have been presented for the six months ended
June 30, 1998 and 1997. Pollo Tropical is a regional quick-service restaurant
chain featuring grilled marinated chicken and authentic "made from scratch" side
dishes. At December 31, 1998, we owned and operated 40 Pollo Tropical
restaurants in Florida and franchised an additional 21 restaurants in the
Caribbean,
 
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Central and South America and Miami. Due to our acquisition of Pollo Tropical in
July 1998, our results for the year ended December 31, 1998 include the
operations of Pollo Tropical from July 10, 1998.
 
RESULTS OF OPERATIONS OF CARROLS
 
     The following table sets forth, for fiscal years 1996, 1997 and 1998,
selected operating results of Carrols as a percentage of restaurant sales:
 
                                                     YEAR ENDED DECEMBER 31,
                                                     -----------------------
                                                     1996     1997     1998
                                                     -----    -----    -----
Restaurant sales:
  Burger King restaurants.........................   100.0%   100.0%    91.6%
  Pollo Tropical..................................      --       --      8.4
                                                     -----    -----    -----
Total restaurant sales............................   100.0    100.0    100.0
Costs and expenses:
  Cost of sales...................................    28.3     29.0     29.5
  Restaurant wages and related expenses...........    29.4     30.3     29.2
  Other restaurant expenses including
     advertising..................................    24.7     25.3     24.3
  General and administrative......................     4.5      4.4      4.6
  Depreciation and amortization...................     4.6      5.1      4.8
                                                     -----    -----    -----
Income from operations............................     8.5%     5.9%     7.6%
                                                     =====    =====    =====
 
FISCAL 1998 COMPARED TO FISCAL 1997.
 
     The results of operations and cash flows for the years ended December 31,
1998 and 1997 include 53 and 52 weeks, respectively. During 1998, we opened 11
Burger King restaurants, acquired 2 Burger King restaurants and closed 5
underperforming Burger King restaurants.
 
     Restaurant Sales.  Burger King restaurant sales for the year ended
December 31, 1998 increased 29.0% to $381.0 million from $295.4 million in 1997.
Sales at our 223 comparable Burger King restaurants (those units operating for
the entirety of the compared periods) increased 6.2% in 1998, using a comparable
number of weeks from the year ended December 31, 1997. Comparable Burger King
restaurant sales increased 7.9% using the actual number of weeks in both fiscal
years. Burger King sales increases were also due to increased sales from our
$.99 Great Tastes Menu and the additional week in 1998. Pollo Tropical
restaurant sales for the period July 10, 1998 to December 31, 1998 totaled
$35.1 million.
 
     Operating Costs and Expenses.  Cost of sales, as a percentage of sales,
were 29.5% in 1998 compared to 29.0% in 1997. The increase in 1998 was due to
higher cost of sales at our Pollo Tropical restaurants, whose cost of sales was
35.1% in 1998, and which affected total cost of sales, as a percentage of sales,
by 0.5%. A 24% increase in costs associated with the new french fry product,
introduced in January 1998 at our Burger King restaurants, and higher food and
paper costs at recently acquired Burger King restaurants was offset by a 5.7%
decrease in beef costs.
 
     Restaurant wages and related expenses, as a percentage of sales, decreased
from 30.3% in 1997 to 29.2% in 1998 due to Pollo Tropical restaurant wages and
related expenses being 23.5% of sales. Pollo Tropical's restaurant wages and
related expenses are lower than those of the Burger King restaurants due to
Pollo Tropical's higher per unit sales volumes. This caused a 0.5% decrease, as
a percentage of sales, in combined restaurant wages and related expenses. The
remainder of the decrease is due to the effect of increased Burger King sales on
fixed management costs and lower unemployment tax rates in New York State and
Ohio.
 
     Other restaurant operating expenses, including advertising, decreased from
25.3% of sales in 1997 to 24.3% in 1998 due to Pollo Tropical's other restaurant
operating expenses being 16.9% of sales. This caused a 0.7% decrease as a
percentage of sales, in total other restaurant operating expenses. In addition,
reduced
 
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utility costs associated with a milder winter in our Burger King operating areas
contributed 0.2%, as a percentage of sales, to the decrease from 1997 to 1998.
 
     Administrative expenses, as a percentage of sales, increased from 4.4% in
1997 to 4.6% in 1998. The increase in 1998 is due to the addition of field
supervision and corporate support as a result of the 1997 acquisition of 93
Burger King restaurants, administrative functions acquired in the July 1998
acquisition of Pollo Tropical, and increased corporate expenses to support our
plans for continued expansion.
 
     EBITDA.  EBITDA increased from $32.5 million in 1997 to $45.4 million in
1998. Included in EBITDA for the year ended December 31, 1998 are refinancing
expenses of $1.6 million and a redemption premium of $4.6 million associated
with the retirement of debt. EBITDA, as adjusted for these items, was
$51.7 million for the year ended December 31, 1998. As a percentage of total
revenues, EBITDA, as adjusted, increased from 11.0% in 1997 to 12.4% in 1998 as
a result of the factors discussed above.
 
     Depreciation and Amortization.  Depreciation and amortization increased
$4.9 million in 1998 compared to 1997 due primarily to the increase in goodwill
and purchased intangibles associated with the purchase of Pollo Tropical in July
1998 and the purchase of Burger King restaurants in 1997.
 
     Interest Expense.  Interest expense was $21.1 million in 1998 compared to
$15.6 million in 1997. The increase in 1998 was due to higher average debt
balances from funding the acquisition of Pollo Tropical in July 1998 and the
acquisition of Burger King restaurants in 1997.
 
     Income Taxes.  The provision for income taxes of $4.8 million in 1998 is
based on an estimated effective income tax rate for 1998 of 53.9%. This rate is
higher than the Federal statutory tax rate due to state franchise and income
taxes and non-deductible amortization of franchise rights and intangible assets
pertaining to our acquisitions.
 
     Net Income.  Net income was $429,000 in 1998 compared to $2,158,000 in
1997. Net income in 1998 includes an extraordinary loss of $3,701,000, which is
net of tax, pertaining to the redemption of our 11.5% senior notes.
 
FISCAL 1997 COMPARED TO FISCAL 1996.
 
     Restaurant Sales.  Restaurant sales for the year ended December 31, 1997,
increased 22.7% to $295.4 million from $240.8 million in 1996. The increase in
sales was primarily the result of the growth in the number of Burger King
restaurants operated by us which increased from 232 at the end of 1996 to 335 at
the end of 1997. During 1997, we opened 11 new restaurants, acquired 93
restaurants in six transactions, and closed one underperforming restaurant.
Sales at our 214 comparable restaurants (those units operating for the entirety
of the compared periods) decreased 1.4% during 1997. In general, we did not
increase menu prices during 1997.
 
     Operating Costs and Expenses.  Cost of sales (food and paper costs), as a
percentage of sales, were 29.0% in 1997 compared to 28.3% in 1996. The increase
in 1997 reflected higher food costs, including approximately a 2% increase in
average beef prices and higher costs as a percentage of sales at our newly
acquired Burger King units.
 
     Restaurant wages and related expenses increased as a percentage of sales
from 29.4% in 1996 to 30.3% in 1997. Wages increased due to higher labor rates
including the effect of increases in the Federal minimum wage rates. A 1996
amendment to the Federal Fair Labor Standards Act of 1938 mandated an increase
from $4.25 per hour to $4.75 per hour which took effect in October 1996, and a
second increase in September 1997 to $5.15 per hour.
 
     Other restaurant operating expenses were 25.3% of sales in 1997 compared to
24.7% in 1996. In part, the increase in 1997 is reflective of general
inflationary increases combined with a decrease in comparable restaurant sales.
In addition, we added a significant number of restaurants through acquisition
during 1997, and, therefore, expense relationships were somewhat higher as these
new units were not yet fully integrated into our business.
 
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     Administrative expenses increased approximately $2.7 million, and, as a
percentage of sales, were 4.4% in 1997 compared to 4.5% in 1996. This increase
reflects the addition of field supervision and corporate support as a result of
the 1997 addition of over 100 restaurants and to support our plans for continued
expansion.
 
     EBITDA.  EBITDA increased from $31.5 million in 1996 to $32.5 million in
1997. As a percentage of sales, EBITDA decreased from 13.3% in 1996 to 11.0% in
1997 as a result of the factors discussed above.
 
     Depreciation and Amortization.  Depreciation and amortization was $15.1
million in 1997 compared to $11.0 million in 1996. The $4.1 million increase in
1997 was due to the increase in goodwill and purchased intangibles resulting
from the purchase method of accounting for newly acquired restaurants.
 
     Interest Expense.  Interest expense was $15.6 million in 1997 compared to
$14.2 million in 1996. The increase in 1997 was the result of higher average
debt balances brought about by the funding of the restaurants that we acquired
during the year.
 
     Income Taxes.  The provision for income taxes of $655,000 in 1997 resulted
in an effective income tax rate of 23.2%. The low effective rate was primarily
attributable to the favorable settlement of a Federal income tax claim that we
had outstanding for several years. As a result of the settlement, our tax
provision was reduced by $806,000, and we recorded interest income of $983,000.
 
     Net Income.  Net income was $2,158,000 in 1997 compared to $3,183,000 in
1996. The decrease in net income is attributable to the factors discussed above.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     We do not have significant receivables or inventory and receive trade
credit based upon negotiated terms in purchasing food products and other
supplies. We are able to operate with a substantial working capital deficit
because:
 
     o restaurant operations are conducted on a cash basis;
 
     o rapid turnover results in a limited investment in inventories; and
 
     o cash from sales is usually received before related accounts for food,
       supplies and payroll become due.
 
Our cash requirements arise primarily from:
 
     o the need to finance the opening and equipping of new restaurants;
 
     o ongoing capital reinvestment in our existing restaurants;
 
     o the acquisition of existing Burger King restaurants; and
 
     o servicing our debt.
 
     Our 1998 operations generated approximately $23.3 million in cash, compared
to $19.9 million during 1997 and $14.3 million in 1996.
 
     Our capital expenditures included acquisitions of $95.3 million in 1998,
$78.5 million in 1997 and $7.9 million in 1996. We acquired Pollo Tropical in
July 1998 for approximately $95 million and we also acquired two Burger King
restaurants earlier in 1998 for approximately $600,000. In 1997 we acquired 93
Burger King restaurants and in 1996 we acquired eight Burger King restaurants.
 
     Capital expenditures, excluding acquisitions, totaled $33.3 million in 1998
as compared to $18.2 million in 1997 and $15.3 million in 1996. Capital
expenditures in 1998 included construction costs for twelve new Burger King
restaurants, eleven of which were open in 1998, and for five new Pollo Tropical
restaurants, four of which were open in 1998. Capital expenditures in 1997
included construction costs for 15 new units, 11 of which were opened in 1997.
Our capital expenditures also include remodeling costs and capital maintenance
projects for the ongoing reinvestment and enhancement of our restaurants. These
expenditures increased in 1998 due to growth in the number of restaurants and
investments being made to enhance the operations of the 95 Burger King
restaurants that we have acquired since the beginning of 1997. During
 
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1998, we completed the remodeling of 16 Burger King restaurants in conjunction
with the renewal of franchises that were scheduled to expire between 1998 and
2000. During the past three years, we have completed the remodeling of 83 Burger
King restaurants. We also have projects underway to upgrade our corporate
information and decision support systems along with our restaurant point-of-sale
and management systems. These systems projects have resulted in incremental
capital investments which totaled approximately $4 million in 1998.
 
     During 1998, we generated $20.5 million from the sale and leaseback of two
Burger King restaurant properties and 13 Pollo Tropical restaurant properties.
During 1997, the sale and leaseback of 15 Burger King restaurant properties
generated $13.0 million. The proceeds from these transactions were used to
reduce outstanding debt. We also paid dividends to our parent totaling $3.9
million in 1998 and $4.3 million in 1997 for our parent's payment of dividends
on and for the redemption of its preferred stock. In 1998 this included the
early redemption of the remaining $3.6 million in preferred stock which was
scheduled for mandatory redemption in December 1998 and December 1999.
 
     At December 31, 1998, we had total outstanding borrowings of
$261.5 million comprised of the $170.0 million principal amount of outstanding
notes, borrowings under our previous credit facility of $88.6 million and other
debt of $2.9 million. In total our borrowings were $101.2 million higher than at
December 31, 1997 and reflected an increase due to borrowings required to fund
the Pollo Tropical acquisition, costs incurred to redeem the 11 1/2% Senior
Notes Due 2003, and borrowings to partially fund capital expenditures for new
restaurants.
 
     On February 12, 1999 we replaced our previous credit facility. Under our
new senior credit facility, Chase Bank of Texas, National Association, as agent,
along with a syndicate of five other lenders, have provided a term loan facility
of $50.0 million, all of which is outstanding, and a revolving credit facility
under which we may borrow up to $100.0 million.
 
     The revolving credit facility expires on December 31, 2003, subject to a
one-year extension upon request and unanimous approval of the lenders, and the
term loan facility is repayable in quarterly installments through September 30,
2003 with a final payment due December 31, 2003. Principal repayments required
in 1999 total $3.0 million. Borrowings under our credit facility bear interest,
at our option, of either:
 
          (1) the greater of the prime rate, or the Federal Funds Rate plus
              .50%, plus a margin of 0%, .25%, .50% or .75% based on debt to
              cash flow ratios; or,
 
          (2) LIBOR plus a margin of 1.00%, 1.25%, 1.50%, 1.75%, 2.00% or 2.25%
              based on debt to cash flow ratios.
 
     At comparable debt to cash flow ratios, these two interest rate options
under our credit facility are .50% lower than under our previous credit
facility.
 
     In 1999, we anticipate capital expenditures of approximately $40 million,
excluding the cost of any acquisitions that we may make. These amounts include
approximately $12 million for construction of new Burger King restaurants,
including certain real estate; $5 million for construction of new Pollo Tropical
restaurants; and $12 million for ongoing reinvestment and remodeling of our
existing restaurants. We are also in the process of upgrading our restaurant
point-of-sale systems, our in-restaurant support systems, and our corporate
information systems. In 1999, we anticipate that we will incur expenditures of
up to $11 million related to these systems projects. We are committed at
December 31, 1998 to purchase approximately $8.6 million of restaurant
point-of-sale systems.
 
     Interest payments under the outstanding notes and the exchange notes after
the completion of the exchange offer and other existing debt obligations will
represent significant liquidity requirements for us. We believe that cash
generated from our operations and availability under our revolving credit
facility will provide sufficient cash availability to cover our working capital
needs, capital expenditures, planned development and debt service requirements
for fiscal 1999.
 
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INFLATION
 
     The inflationary factors which have historically affected our results of
operations include increases in food and paper costs, labor and other operating
expenses. Wages paid in our restaurants are impacted by changes in the Federal
or state minimum hourly wage rates. Accordingly, changes in the Federal or
states minimum hourly wage rate directly affect our labor cost. We and the
restaurant industry typically attempt to offset the effect of inflation, at
least in part, through periodic menu price increases and various cost reduction
programs. However, no assurance can be given that we will be able to offset such
inflationary cost increases in the future.
 
YEAR 2000
 
     We recognize the need to ensure our operations will not be adversely
impacted by Year 2000 software failures. We have addressed this risk to the
availability and integrity of financial systems and the reliability of operation
systems. We have projects underway for the installation of new point-of-sale
(POS) systems in our restaurants, although substantially all of our existing POS
systems will operate through the change to Year 2000, and for the replacement of
a substantial portion of our corporate financial and decision support systems.
 
     The primary purpose of these projects is to improve the efficiency of our
restaurant and support operations, however, they will also provide the
additional benefit of making our systems Year 2000 compliant where necessary. We
have purchased point-of-sale hardware and software, and a suite of corporate
financial software applications all of which are designed and warranted to be
Year 2000 compliant. The total cost of these capital projects is anticipated to
be approximately $14 million. Through December 31, 1998, we have expended
$4.5 million associated with these projects. The majority of the remaining
expenditures pertain to restaurant point-of-sale hardware.
 
     As of December 31, 1998, we had successfully implemented certain corporate
financial applications including general ledger, accounts payable and asset
management as well as all salaried payroll and human resource processing. The
remaining significant corporate support systems to be implemented are hourly
restaurant payroll and human resources, anticipated to begin production during
the second quarter of 1999, and sales and inventory accounting systems which are
anticipated to be implemented by the third quarter of 1999. We believe that all
of our computer systems will be Year 2000 compliant by the end of the third
quarter of Fiscal 1999.
 
     In addition to our internal efforts, we are also monitoring certain
initiatives of BKC as they evaluate Year 2000 readiness of food and equipment
suppliers, utility companies, and other key suppliers to the Burger King system.
Although BKC has not made any representations or warranties with respect to such
activities, they will provide us the results of third party validations of the
readiness of existing equipment used in the restaurants, summarized responses
from shared vendors and domestic contingency plans. We have also been closely
monitoring the remediation progress of our major food supplier and working
closely with it to successfully interface our ordering and delivery systems as
changes are made to these systems.
 
     We have not developed a detailed contingency plan due to the anticipated
implementation dates associated with our planned systems conversions and the
anticipated timing of the Burger King results being provided to us. We are
evaluating our implementation progress on an ongoing basis and will develop
contingency plans as needed should our scheduled implementation dates be
modified or if the Burger King results warrant enhanced contingency planning.
While we are taking steps to monitor the progress of our key suppliers, we
cannot be assured that their remediation efforts will be successful, in which
case we could be adversely impacted by our ability to obtain food supplies for
our restaurants. In the event that the remediation efforts of our suppliers are
not successful we believe that we could alternatively process orders to obtain
food supplies for our restaurants manually. Should we be unable to process
orders we believe that the time required by our key suppliers to implement
corrective actions, when combined with our inventory levels, would not result in
a material disruption to our restaurant operations.
 
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     These are forward looking statements and are subject to risks and
uncertainties, including the ability of third party vendors and software
provided by third parties to effectively satisfy the requirements of being Year
2000 compliant.
 
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                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on the 19th day of
April, 1999.
 
                                       CARROLS CORPORATION
 
                                       By:           /s/ ALAN VITULI
                                           ------------------------------------
                                                       Alan Vituli,
                                           Chairman and Chief Executive Officer